Why does hot oil explode when pouring water on it? What is the reason that hot oil makes sound and explodes when water is poured on it?
 A: Oil heats up faster than water because it has a lower specific heat capacity.
As it reaches past boiling point of water as the water is denser than oil so its at the bottom.
Then it turns into steam and the steam expands splashing the oil everywhere.
As for dropping water into already being  hot oil
its pretty much the same. Its interface determines the rate of heat flow.
A: Oil boils at a higher temperature than water which means that when water is poured into boiling oil it is heated to, and past, the boiling point very quickly.  Oil is also less dense than water meaning that the water will sink to the bottom of the pot.
Water at the bottom of the pot being heated very rapidly forms a gas at the bottom of the pot underneath all of the oil.  The gas takes up much more volume than the water previously did and also is now less dense than the oil and so it shoots up creating a fountain of oil and steam out of the pot.
This fountain creates a fine mist of the very hot oil, this greatly increased surface area coupled with the already hot oil causes it to ignite which then ignites surrounding droplets until the entire batch of oil that was displaced from the pot is a huge fireball.
http://en.wikipedia.org/wiki/Deep_frying
You can also find pretty cool videos on youtube about this exact thing
A: Shrapnel.
The oil is analogous to the container that holds the explosive (water-->steam) .
A: The liquid water changes phase when heated above the boiling point, namely it becomes a gas. When water vapor in cavitation bubbles escapes fast, it makes a mess. The sound of splashing aside, notice that nothing happens if the oil is cold.
Related fun fact: The pistol shrimp is so loud, it kills other fish by snapping with its claw. 
A: The essential basic fact is that the boiling temperature of oil is very much above that of water, known to be $100^\circ\;\mathrm{C}$ at atmospheric pressure (by definition).
For oil, the boiling point varies, but is very often above $200^\circ\;\mathrm{C}$: $197^\circ\;\mathrm{C}$ for olive oil, $246^\circ\;\mathrm{C}$ for corn oil (depending on quality, it can vary significantly), and around $300^\circ\;\mathrm{C}$ for refined motor oil. Actually, organic oil may smoke, i.e., decompose chemically, much before it boils, but nevertheless at very high temperature such as $191^\circ\;\mathrm{C}$ for olive oil (extra virgin, higher for other qualities).
Thus hot oil may mean much hotter than the boiling point of water. Whatever the heat capacity of oil, or more precisely its specific heat, which is actually about half that of water, the very high temperature can provide considerable heat that will cause an instant change of state from water to steam, creating instantly a considerable change in pressure, thus in volume, i.e. an explosive behaviour for each drop of water.
Following on a comment by mikuszefski, there is also an issue of
relative density, water being denser than oil. The effect depend on
the amount of water being poured.  If it is only a few drops, they
either vaporize instanly, of are kept buoyant by the steam pressure as
the bottom vaporizes first.
However, if the amount of water is more important, the buoyance will
be insufficient (it is proportional to the square of the water blob
size, while the weight is proportional to the cube), and the denser
water will fall into the oil, while continuing its explosive
vaporization, which may then carry some of the oil with it.
A: Yes, its pretty much the same. More precisely, its due to the difference in their temperature and due to vigorous transfer of thermal energy from hot oil to cold water where water instantly changes its state into vapour.
A: The water heats up and expands as it is falling through the oil, due to density. the water is covered up and expands into steam blowing the oil away. boom.
A: Due to abrupt  transference of heat energy from hot oil to cold water drop.
